Bill Text: IA SF563 | 2019-2020 | 88th General Assembly | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: A bill for an act relating to pharmacy benefit managers and information related to the management of prescription drug benefits, and including applicability provisions. (Formerly SF 347.) Effective 7-1-19.

Spectrum: Committee Bill

Status: (Passed) 2019-05-08 - Signed by Governor. S.J. 1196. [SF563 Detail]

Download: Iowa-2019-SF563-Introduced.html

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Senate File 563 - Introduced
SENATE FILE 563
BY COMMITTEE ON HUMAN
RESOURCES
(SUCCESSOR TO SF 347)
A BILL FOR
An Act relating to pharmacy benefit managers and health
carriers and management of prescription drug benefits, and
including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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Section 1. NEW SECTION . 510C.1 Definitions.
As used in this chapter unless the context otherwise
requires:
1. “Administrative fees” means a fee or payment, other than
a rebate, under a contract between a pharmacy benefit manager
and a pharmaceutical drug manufacturer in connection with the
pharmacy benefit manager’s management of a health carrier’s
prescription drug benefit, that is paid by a pharmaceutical
drug manufacturer to a pharmacy benefit manager or is retained
by the pharmacy benefit manager.
2. “Aggregate retained rebate percentage” means the
percentage of all rebates received by a pharmacy benefit
manager that is not passed on to the pharmacy benefit manager’s
health carrier clients.
3. “Commissioner” means the commissioner of insurance.
4. “Covered person” means the same as defined in section
514J.102.
5. “Formulary” means a complete list of prescription drugs
eligible for coverage under a health benefit plan.
6. “Health benefit plan” means the same as defined in
section 514J.102.
7. “Health carrier” means the same as defined in section
514J.102.
8. “Health carrier administrative service fee” means a fee
or payment under a contract between a pharmacy benefit manager
and a health carrier in connection with the pharmacy benefit
manager’s administration of the health carrier’s prescription
drug benefit that is paid by a health carrier to a pharmacy
benefit manager or is otherwise retained by a pharmacy benefit
manager.
9. “Pharmacy benefit manager” means a person who, pursuant
to a contract or other relationship with a health carrier,
either directly or through an intermediary, manages a
prescription drug benefit provided by the health carrier.
10. “Prescription drug benefit” means a health benefit
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plan providing for third-party payment or prepayment for
prescription drugs.
11. “Rebate” means all discounts and other negotiated price
concessions paid directly or indirectly by a pharmaceutical
manufacturer or other entity, other than a covered person,
in the prescription drug supply chain to a pharmacy benefit
manager, and which may be based on any of the following:
a. A pharmaceutical manufacturer’s list price for a
prescription drug.
b. Utilization.
c. To maintain a net price for a prescription drug for
a specified period of time for the pharmacy benefit manager
in the event the pharmaceutical manufacturer’s list price
increases.
d. Reasonable estimates of the volume of a prescribed drug
that will be dispensed by a pharmacy to covered persons.
Sec. 2. NEW SECTION . 510C.2 Annual report to the
commissioner.
1. Each pharmacy benefit manager shall provide a report
annually by February 15 to the commissioner that contains
all of the following information regarding prescription drug
benefits provided to covered persons of each health carrier
with whom the pharmacy manager has contracted during the prior
calendar year:
a. The aggregate dollar amount of all rebates received by
the pharmacy benefit manager.
b. The aggregate dollar amount of all administrative fees
received by the pharmacy benefit manager.
c. The aggregate dollar amount of all health carrier
administrative service fees received by the pharmacy benefit
manager.
d. The aggregate dollar amount of all rebates received by
the pharmacy benefit manager that the pharmacy benefit manager
did not pass through to the health carrier.
e. The aggregate amount of all administrative fees received
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by the pharmacy benefit manager that the pharmacy benefit
manager did not pass through to the health carrier.
f. The aggregate retained rebate percentage as calculated by
dividing the dollar amount in paragraph “d” by the dollar amount
in paragraph “a” .
g. Across all health carrier clients with whom the pharmacy
manager was contracted, the highest and the lowest aggregate
retained rebate percentages.
2. a. A pharmacy benefit manager shall provide the
information pursuant to subsection 1 to the commissioner in a
format approved by the commissioner that does not directly or
indirectly disclose any of the following:
(1) The identity of a specific health carrier.
(2) The price charged by a specific pharmaceutical
manufacturer for a specific prescription drug or for a class
of prescription drugs.
(3) The amount of rebates provided for a specific
prescription drug or class of prescription drugs.
b. Information provided under this section by a pharmacy
benefit manager to the commissioner that may reveal the
identity of a specific health carrier, the price charged
by a specific pharmaceutical manufacturer for a specific
prescription drug or class of prescription drugs, or the amount
of rebates provided for a specific prescription drug or class
of prescription drugs shall be considered a confidential record
and be recognized and protected as a trade secret pursuant to
section 22.7, subsection 3.
3. The commissioner shall publish, within sixty calendar
days of receipt, the nonconfidential information received by
the commissioner on a publicly accessible internet site. The
information shall be made available to the public in a format
that complies with subsection 2, paragraph “a” .
Sec. 3. NEW SECTION . 510C.3 Rules.
The commissioner of insurance shall adopt rules pursuant to
chapter 17A as necessary to administer this chapter.
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Sec. 4. NEW SECTION . 510C.4 Enforcement.
The commissioner may take any action within the
commissioner’s authority to enforce compliance with this
chapter.
Sec. 5. NEW SECTION . 510C.5 Applicability.
This chapter is applicable to a health benefit plan that is
delivered, issued for delivery, continued, or renewed in this
state on or after January 1, 2020.
Sec. 6. NEW SECTION . 514M.1 Definitions.
As used in this chapter, unless the context otherwise
requires:
1. “Commissioner” means the commissioner of insurance.
2. “Cost sharing” means any copayment, coinsurance,
deductible, or other out-of-pocket expense requirement.
3. “Covered person” means the same as defined in section
514J.102.
4. “Health benefit plan” means the same as defined in
section 514J.102.
5. “Health carrier” means the same as defined in section
514J.102.
6. “Health carrier cost” means the amount that a health
carrier has contracted with a dispensing pharmacy to pay the
dispensing pharmacy for a covered prescription drug, after
accounting for rebates, and excluding a covered person’s cost
sharing.
7. “Pharmacy benefits manager” means the same as defined in
510C.1.
8. “Prescription drug benefit” means the same as defined in
section 510C.1.
9. “Rebate” means any of the following:
a. A negotiated price concession for a prescription
drug that may accrue directly or indirectly to a health
carrier during a health benefit plan coverage year from a
pharmaceutical manufacturer, a dispensing pharmacy, or from
another entity in the prescription drug supply chain taking
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part in a transaction involving a pharmaceutical manufacturer’s
prescription drug and which may be based on any of the
following:
(1) A pharmaceutical manufacturer’s list price for a
prescription drug.
(2) Patient outcomes.
(3) A reasonable estimate of price concessions necessary
to maintain the net price of a prescription drug for the
health carrier for a specified period of time in the event the
pharmaceutical manufacturer’s list price increases.
b. A reasonable estimate of fees and other administrative
costs that are passed through to the health carrier by the
pharmaceutical manufacturer.
10. “Trade secret” means the same as defined in section
550.2.
Sec. 7. NEW SECTION . 514M.2 Cost sharing —— prescription
drug benefit.
1. If a health carrier provides prescription drug benefits
to a covered person under a health benefit plan, the health
carrier shall reduce any cost sharing requirement for a
prescription drug for the covered person by an amount equal to
the greater of the following:
a. A dollar amount that equals not less than fifty-one
percent of the aggregate rebates received by the health
carrier.
b. An amount that ensures that the covered person’s cost
sharing for the prescription drug does not exceed fifty-one
percent of the health carrier’s cost for the prescription drug.
2. A health carrier or health benefit plan may reduce a
covered person’s cost sharing by an amount greater than the
amount required pursuant to subsection 1.
3. In complying with this section, a health carrier and
the health carrier’s agents shall not publish or otherwise
disclose, directly or indirectly, any information regarding
the actual amount of rebates the health carrier receives for
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a specific prescription drug, from a specific pharmaceutical
manufacturer, or from a specific pharmacy. Rebate information
is a trade secret under chapter 550 and is a confidential
record under section 22.7, subsection 3.
4. A health carrier shall have a written agreement with
any third-party vendor or downstream entity requiring the
third-party vendor or downstream entity to comply with
subsection 3 if the third-party vendor or downstream entity
receives or has access to the health carrier’s rebate
information in the course of performing any health care or
administrative services on behalf of the health carrier.
Sec. 8. NEW SECTION . 514M.3 Rules.
The commissioner of insurance shall adopt rules pursuant to
chapter 17A as necessary to administer this chapter.
Sec. 9. NEW SECTION . 514M.4 Enforcement.
The commissioner may take any action within the
commissioner’s authority to enforce compliance with this
chapter.
Sec. 10. NEW SECTION . 514M.5 Applicability.
This chapter is applicable to a health benefit plan that is
delivered, issued for delivery, continued, or renewed in this
state on or after January 1, 2020.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
This bill relates to pharmacy benefit managers, health
carriers, and the management of prescription drug benefits.
The bill requires a pharmacy benefit manager to submit
an annual report to the insurance commissioner that provides
information on prescription drug prices and rebates received by
the pharmacy benefit manager. The information is required to
cover the prior calendar year and encompass prescription drug
benefits provided to covered persons of each health carrier
with whom the pharmacy benefit manager was contracted during
that calendar year. “Pharmacy benefits manager” is defined
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in the bill as a person who, pursuant to a contract or an
employment relationship with a health carrier, either directly
or through an affiliate or intermediary, manages a prescription
drug benefit provided by the health carrier. The bill defines
a “health carrier” as an entity subject to the insurance laws
and regulations of this state, or subject to the jurisdiction
of the commissioner, including an insurance company offering
sickness and accident plans, a health maintenance organization,
a nonprofit health service corporation, a plan established
pursuant to Code chapter 509A for public employees, or any
other entity providing a plan of health insurance, health care
benefits, or health care services.
The commissioner is required to make the information
provided by the pharmacy benefit managers available on a
publicly accessible internet site. The bill prohibits the
pharmacy benefits manager or the commissioner from providing
the information in a manner that identifies a specific
health carrier, a specific price charged by a pharmaceutical
manufacturer, or the amount of rebates received by a pharmacy
benefit manager for a specific drug or class of drug. If
information submitted to the commissioner by the pharmacy
benefits manager does contain any of these details, the
information is deemed confidential and proprietary and is a
confidential record pursuant to Code chapter 22.
The bill prohibits a health carrier from imposing a cost
sharing requirement on a covered person for a prescription
drug that exceeds an amount equal to the greater of either the
dollar amount of 51 percent or more of the aggregate rebates
received by the health carrier, or an amount that ensures that
the covered person’s cost sharing for the prescription drug
shall not exceed 51 percent of the health carrier’s cost for
the prescription drug. “Covered person” is defined in the bill
as a policyholder, subscriber, enrollee, or other individual
participating in a health benefit plan.
A health carrier is prohibited from disclosing any
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information regarding the actual amount of rebates the health
carrier received for a specific drug, or from a specific
pharmaceutical manufacturer, or from a specific pharmacy
in order to comply with the cost sharing requirement.
Rebate information is protected as a trade secret and is a
confidential record. A health carrier is also required to have
an agreement with the health carrier’s third-party vendors and
downstream entities as necessary to ensure the information is
protected as a trade secret.
The bill requires the commissioner of insurance to adopt
rules as necessary to administer the provisions of the bill.
The bill also allows the commissioner to take any action within
the commissioner’s authority to enforce compliance with the
provisions of the bill.
The bill is applicable to health benefit plans that are
delivered, issued for delivery, continued, or renewed in this
state on or after January 1, 2020.
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